Though often overlooked, the trucking industry is vitally important to the health of the US economy. Think about it: without truck drivers delivering goods, interstate commerce would grind to a screeching, tire-burning halt.
Unique Challenges
Despite the importance of trucking companies, the way the system is structured often leaves them from a shaky financial position. Truck companies submit invoices for services rendered, and then often wait 30-90 days for payment on the accounts receivables.
For a bigger company with large cash reserves, waiting to be paid would not be a huge concern. But for small to mid-size companies operating on a strict budget, it might stop an option. Expenses with regard to example payroll and gas sum up in the time between payment, and not paying your drivers is never a good business repeat. Add to that rising fuel costs, delays due to traffic congestion, driver shortages and new regulations, and it is a recipe for financial hardship.
Therefore, trucking companies often have to turn to outside funding. The following are some strategies to trucking companies to consider:
Asset-Based Lending
Also known as factoring, this options refers to carpet by which businesses sell their accounts receivables to a factoring company. Approval for factoring is founded on on the creditworthiness of the trucking company’s customers.
At the duration of the sale, customer gets 80-90% for this cash back immediately from the debts. The remainder of the balance comes after customer repayment, less a share fee that typically ranges from 1-5%.
This option is best for B2B companies that cannot afford to wait for payment, and also the cost is usually 4-5% monthly with an impressive annual pace typically between 18-30%.
Bank Loans
Though hard to come by, bank loans are an cheapest involving financing. The loan process involves an application and overview of the company’s creditworthiness and financial history. Small companies especially possess a be thrown to the wolves for loans, although exceptions do be.
After approval, fund disbursement usually takes about 30-90 days attain a trucking company’s bank account. This form of funding greatest for for trucking outfits by using a great credit history and do not require the money immediately.
Cash-Advances
Cash advances take place when a company receives a loan sum during a lender. They pays loan provider back with percentages of that monthly card receipts up to the loan (plus a predetermined rate) is repaid. Tend to be two legal limits to the rates, and so they also cannot be changed retroactively. The help cash advances is immediate cash- it is the fastest method for obtaining cash without in order to a loan shark.
This financing method is the for trucking companies who require immediate cash for a short amount associated with your and have limited financing options. Will not find is usually 20% or even more.
Lease-Back
A trucking company may want to sell property, plant, and/or equipment, and simultaneously leases it back for resources.
It is best for trucking companies with valuable plant or equipment assets that are underutilized, and the cost is monthly lease payments plus the depreciation and tax burdens of machines.
Choices, Choices
Every trucking company is unique, and it is up to them to locate funding solutions that meet their individual needs. Being informed on all the options is one step toward finding a fitting cash flow solution.
4 Global Corp
12963 W Okeechobee Rd suite 4, Hialeah Gardens, FL 33018
(305) 912-9444